Forex dealers said the dollar demand was so strong that even sustained capital inflows amid stable dollar overseas and positive local equities could not stem the rupee's fall.
The local unit commenced better at 55.45 a dollar from last Friday's close of 55.51 and immediately touched a high of 55.42 on the back of firm local stocks.
However, month-end dollar demand from oil importers and some banks later weighed on the rupee and it fell to a low of 55.89 before closing the day at 55.73, a fall of 22 paise, or 0.40 per cent.
Treasury managers at banks said there was no sign of intervention by the Reserve Bank on Monday even as the local currency is moving fast to 56-level.
They added that RBI intervention is very much likely if the rupee falls below 56-level on Tuesday.
"The rupee continued its weakening spree after the political logjam continued for the third straight session as the government is lacking clear mandate to go ahead with the set of financial and non-financial policy reforms," Alpari Financial Services (India)
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